Revenue
Churn Rate
Churn rate is the percentage of customers who cancel their subscription within a given period. It's calculated as: Customers Lost / Total Customers at Start × 100.
Key Takeaway
Churn rate is the percentage of customers who cancel their subscription within a given period.
Why churn rate matters for SaaS
Churn kills SaaS. 5% monthly churn means half your customers are gone in a year. But churn varies by cohort—customers acquired from different keywords might have different retention rates.
How tracerHQ measures churn rate
tracerHQ tracks churn rate by acquisition keyword. You can discover that customers from "comparison" keywords have 10% annual churn while "how-to" keyword customers have 3%—informing both SEO and product priorities.
Churn Rate in depth
Churn rate measures how fast customers are leaving. It comes in two flavors: logo churn (share of customers lost) and revenue churn (share of MRR lost). Revenue churn can be net (accounting for expansion from remaining customers) or gross (ignoring expansion). The right denominator is the base at the start of the period, not a blended average. Small SaaS companies with low account counts should watch churn over longer windows (quarterly) to avoid noise from a single departure swinging the rate. In B2B SaaS, 2-3% monthly logo churn is healthy, 5% is concerning, and 8%+ suggests product-market fit issues. Churn rate is the main input to LTV and therefore controls how much you can afford to spend on acquisition, which is why even a small improvement in retention typically creates more value than an equivalent improvement in new-customer conversion rate.
monthly_churn_rate = (customers_lost_in_period / customers_at_start_of_period) * 100
Examples in practice
A SaaS with 500 customers at the start of May loses 20 by month-end, giving a 4% monthly logo churn rate, implying an average customer lifetime of 25 months.
A team reports 3% logo churn but 1% net revenue churn, because expansion revenue from upgrades is nearly offsetting the revenue lost to cancellations.
An agency segments churn by acquisition channel: SEO-sourced customers churn at 2.1% monthly while cold-outbound-sourced customers churn at 5.4%, a 2.5x gap that reshapes go-to-market priorities.
Common mistakes
- Using the end-of-period customer count as the denominator, which artificially lowers the churn rate.
- Reporting logo churn without revenue churn on businesses with large ACV variance.
- Not accounting for involuntary churn (failed cards) separately from voluntary churn.
- Measuring monthly churn on small cohorts where a single lost customer can swing the rate by several percentage points.
Related terms
Track churn rate in your dashboard
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